With over 770 million GPS-enabled smartphones, location data has begun to permeate the entire mobile space. The possibilities for location-based services on mobile go beyond consumer-facing apps like FourSquare and Shopkick. It’s powering advertisements, and many other services — from weather to travel apps.

We specifically examine how location-enabled mobile ads have generated excitement, look at how location-based feature have boosted engagement for apps, and demystify some of the underlying technologies and privacy issues.

Cell tower data: When GPS signals can’t reach the device’s GPS chip, which often happens indoors, the device will often report its location by communicating with the cell tower it’s connected to and estimating its distance. It’s less accurate than pure GPS data.

Wi-Fi connection: It’s an accurate method but requires an active Wi-Fi hotspot. Wi-Fi locations are matched with GPS coordinates. It can pinpoint a user to a specific storefront, which is why many retailers are rolling out free public Wi-Fi to enable in-store mobile ads.

IP address: Location can be gauged by the IP address associated with the data connection. The accuracy of this approach varies between carriers, and is far less reliable than the above methods.

User-reported: When users sign up for emails or register for mobile apps and services, they often enter their addresses and zip codes. This data can be translated into GPS coordinates to build a geolocation profile of a single user or user base.

The ability to collect user location data and track it has raised some concerns over privacy. However, Android and iOS give users the ability to opt out of location tracking altogether via their settings.

Roaming confusion has already caused the NSA to “accidentally” listen in on domestic calls, but according to a report from Spiegel, the organization is capable of a lot more. The German news magazine says it has seen evidence that the NSA can tap smartphones for SMS traffic, location data, contact list information and more. The claims, reportedly outlined in internal NSA documents, specifically call out iOS and BlackBerry devices as targets, describing the ability to access iPhone data by hacking a recently synced PC. BlackBerry access seems a bit more direct, Spiegel reports, suggesting that the NSA can tap into the BlackBerry email system. BlackBerry officials told Spiegel it wouldn’t comment on the allegations, but assured the news source that it hasn’t provided the NSA with a “‘back door’ pipeline to our platform.” Regardless, it’s a haunting claim — particularly for folks that use BlackBerry devices for their heavily toutedsecurity, but considering everything the NSA has been up to recently, we can’t say we’re entirely surprised.

A new Instagram privacy policy goes into effect on January 16th, 2013. The service will now be sharing your data with its new owner Facebook. Get used to it.

Basically, Instagram has updated a few of the subhead sections of its policy to reflect the fact that it is a part of Facebook now. Instagram can now share information like cookies, log files, device identifiers, location data, and usage data,with “with businesses that are legally part of the same group of companies that Instagram is part of.” According to the Instagram blog, it’s a wonderful thing for you:

Our updated privacy policy helps Instagram function more easily as part of Facebook by being able to share info between the two groups. This means we can do things like fight spam more effectively, detect system and reliability problems more quickly, and build better features for everyone by understanding how Instagram is used.

Less spam? Great! Of course, this also means that Instagram is heaping its data over with the privacy nightmare that’s Facebook. The data will definitely be used to target better advertising at you on Facebook, and to serve you advertisements on Instagram whenever that starts happening. Here is the relevant section from the new policy:

Affiliates may use this information to help provide, understand, and improve the Service (including by providing analytics) and Affiliates’ own services (including by providing you with better and more relevant experiences).

There are plenty of cool GPS data projects in existence, but this is one of the most beautiful I’ve seen: three whole years of location data, taken from an iPhone.

To make it, Aaron Parecki collected the location from his iPhone every few seconds for over three years. Then he turned his data into a map—it’s Portland, if you’re trying to work it out. He explains:

“Approximately one GPS point was recorded every 2-6 seconds when I was moving, and these images represent about 2.5 million total GPS points. Collectively, they represent a data portrait of my life: everywhere I’ve been and the places I’ve been most frequently. The map is colored by year, so you can see how my footprint changes over the years, depending on where I live.”

The result may be nothing new, but it sure is pretty. It’s also well worth clicking on the image above to see the full, high-res version. [Aaron Parecki]

Digital Consigliere

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.